Commodities guru Jim Rogers, who correctly predicted the supercycle in the late 1990s, remains keen on some raw materials despite recent turbulence in the sector. Today’s oil prices should be considered a floor, not a ceiling, he told Germany’s Focus Money. Longer term, prices will keep climbing, as all the world’s known oil reserves are dwindling, while fracking and other techniques to extract oil won’t offset this trend. Agricultural commodities, meanwhile, have been on the slide in recent years and look set for a comeback. But his favourite picks are gold and silver. They are “going through the roof”.
Don’t buy just yet, however. We are heading for a nasty economic downturn and a huge bear market in US-led global stocks, a consequence of the ongoing global build-up in debt since the financial crisis. When the crash comes, gold will fall at first, just as it did in 2008. The dollar will rise as global investors flee to the safety of the world’s reserve currency. Once the damage to the US is clear, and investors remember America’s huge debt pile and penchant for money-printing, demand for gold is likely to jump.
Longer term, the dollar is on the way out as a reserve currency, reflecting America’s decline as the world’s biggest debtor. Once the yuan becomes fully convertible, it will a credible alternative. “In my lifetime – and I am 75 – China will dominate the world economy,” says Rogers, who is putting his family, as well as his money, where his mouth is. In 2007 he moved his family to Singapore so they can learn Chinese.